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Wednesday 27th May 2009 |
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Rakon, the maker of components for navigation systems, posted a 59% slump in earnings as the global economic downturn saps demand for high-end electronic goods. The company is planning to lift its investment in China.
Profit for the year ended March 31 fell to $4.5 million, or 3.6 cents per share, from $10.9 million a year earlier, the company said in a statement today. Sales shrank 20% to $139.5 million while operating expenses rose 4.6% to $55.7 million. The company cut its dividend to shareholders.
“Sales of consumer GPS were soft in the second half of the financial year, but we are now seeing some demand returning,” said managing director Brent Robinson. “We consider offshore manufacturing in China and India as being one of the keys to Rakon’s success in the coming years.”
The company was forced to slash costs in the second half after it posted a first-half slump in profit as the global economy fell into a downturn. It reduced its New Zealand workforce by 10% in November and cut its manufacturing capacity 20% for eight weeks between February and April.
The company’s shares tumbled 67% in 2008, one of the biggest declines on the NZX 50 Index. The stock was unchanged at $1.50 today.
Rakon said European revenue rose 10% from the previous year as lower manufacturing costs allowed it to take advantage of an improvement in its product mix. The company completed the transfer of its manufacturing from France to its joint venture in India.
Robinson said its manufacturing ventures in Indian and China would be vital to a positive outlook, and the company’s looking to build on its 40% stake in China-based Timemaker.
The electronics manufacturer expects an increase in the volume of global positioning systems sold, with more than half of all cell phones likely to have GPS functionality in the next five years.
Robinson said this would be offset by smaller margins and lower prices as competition increases.
The company was happy with the state of its balance sheet, and said it had substantial debt facilities that it hadn’t tapped. It lifted its operating cash flow to $16.6 million from $1.4 million the previous year.
Businesswire.co.nz
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